Robinhood Fined $30M For Violating Anti-Money-Laundering And Cybersecurity Regulations
The New York State Department of Financial Services imposed a $30 million fine on the cryptocurrency trading unit of online brokerage Robinhood Markets Inc. for alleged violations of anti-money-laundering and cybersecurity regulations, in the department’s first crypto enforcement action.
The New York State financial regulator said on Tuesday that Robinhood Crypto LLC failed to maintain and certify compliant anti-money-laundering and cybersecurity programs. As part of the consent order, Robinhood also will be required to retain an independent consultant to evaluate its compliance with NYDFS’s regulations and its remediation efforts.
Investigation Results On Anti-Money Laundering
Furthermore, Robinhood also failed to comply with certain consumer-protection requirements by not having a dedicated phone number on its website to receive consumer complaints.
Investigation Brought About Negative Impact On Robinhood
Ms. Harris said, DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions”.
The settlement was the latest headache for the mobile investing firm, which achieved mass popularity during the Covid-19 pandemic. Robinhood’s monthly active user count dropped 25% in the first quarter from last year’s quarterly peak, while its revenue dropped 47%. The company has shifted its focus from rapid growth to cost-cutting, laying off 9% of its staff earlier this year.
Robinhood also has found itself on a collision course with regulators after SEC Chairman Gary Gensler June outlined a revamp of trading rules that could threaten part of its business model.